The Dawn of Solar: Treasury’s Energy Loan Scheme Revealed

The Grand Unveiling

Bold moves are being made in the energy sector. Just this week, the National Treasury took the covers off the much-anticipated Energy Bounce Back Loan Guarantee Scheme (EBB). This isn’t just another program — it’s a ticket to cleaner energy for small businesses and households itching to make a switch.

From the President’s Desk

If you’ve been tracking national conversations, you’d recall President Cyril Ramaphosa’s State of the Nation Address earlier this year. He expressed, quite assertively, a commitment to remodel the bounce-back loan scheme. The goal? Empower small businesses to tap into the solar equipment space.

Following suit, Minister of Finance Enoch Godongwana got down to the specifics during the 2023 Budget address. Here’s the gist: the government is stepping up to back solar-related loans for SMEs. How? By guaranteeing these loans on a “20 percent first-loss basis.”

EBB: The Main Highlights

• Time Frame: The EBB isn’t forever. Businesses and households have until August 30, 2024, to jump aboard.
• The Big Objective: EBB’s aspirations are high — producing an additional 1000MW in generation capacity and bolstering resilience against load shedding for smaller players in the business scene. Resilience doesn’t just mean more power – it means reliable power storage solutions like batteries and inverters.
• Tax Benefits: Think the EBB is the only good news? Think again. The 2023 Budget threw in an enticing tax credit of up to 25% on solar PV panel expenses, capped at a sweet R15,000.

Let’s Talk Mechanisms

1. Rooftop Solar for SMEs & Households: Beyond being just a loan, this paves the way for investments like solar panels, inverters, and related setup expenses.
2. For Energy Service Companies (ESCOs): Here’s the deal — ESCOs can land loans that enable them to offer leasing and power purchase deals to SMEs and households. This mechanism reduces the financial pressure on businesses and households by cutting the need for hefty upfront rooftop solar costs.
3. Working Capital Boost for Solar Suppliers: As demand soars, suppliers of rooftop solar solutions can now easily access working capital loans, ensuring quicker and hassle-free access to essential equipment.

Who’s Eligible?

• Maximum turnover? R300 million.
• Financial institutions and non-bank lenders can tap into the scheme up to R300m per entity via commercial banks.
• Business borrowing cap stands at R10m. But for resilience-enhancing tools, there’s a special R30,000 cap tailored for smaller businesses.
• Households aren’t left out — they can get loans up to R300,000 for rooftop solar setups.
• Those in the thick of the solar supply chain can borrow up to a whopping R100m to minimize delays.

Setting Rates Right

The loan pricing strategy is pretty clear: it’s the repo rate at the start of the loan added to a maximum of 6%.

Keen to Apply?

If this all sounds like your cup of tea, the Treasury has made the application process relatively straightforward. Both households and SMEs can head to any participating bank. These banks, along with Development Finance Institutions and other SME finance providers, will offer competitive terms within the set parameters.

The EBB is more than a scheme. It’s an avenue to a brighter, more sustainable future. And the ball is now in the court of businesses and households to make the most of it.